Treasury Prices Fall After Data, Fed Comments

Standard & Poor's Equity Research

MARKETSCOPE : Treasury bond prices rose on Thursday, amid mixed data, Fedspeak and fresh concerns about the housing market.

The 10-year Treasury notes were yielding 5.06% near closing time, compared to 5.15% at Wednesday's close. Yields fall when prices rise. The 30-year bonds yielded 5.16% from 5.27%.

The Conference Board reported its index of leading indicators dropped 0.1% in April, compared with a market expectation of a 0.1% increase. However, the March drop of 0.1% was revised sharply higher to a 0.4% increase.

Initial Claims for unemployment insurance jumped 42,000 to 367,000 in the week ended May 13, a shock to the market which had expected a small drop.

The Philadelphia Fed survey suggested weakness even though the index diffusion index of current activity rose to 14.4 in April from 13.2 in March. 29% of the firms reported increases in activity, while 15% reported decreases.

Fed Chairman Bernanke commented on slowing in the housing market. He said he is "not very concerned" over the commercial real estate market, though he did indicate that a review of commercial lending practices is needed. He also cautioned banks to be prudent on making non-traditional types of loans, among other things.

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